Dow Jones Natural Gas - Morning Commentary

DJ Natural Gas Extends Losses as Cooling Demand Outlook Fades



  By Christian Berthelsen


  Natural gas futures were on track for their fourth straight losing session on Thursday, as heat wave forecasts faded
and expectations for gas-fired cooling demand weakened.

  Natural gas for the new front-month July contract was down 3.4 cents, or 1.2%, at $2.8130 a million British thermal
units on the New York Mercantile Exchange, approaching their lowest levels in nearly three weeks. Futures have lost
about 7% since their recent peak in the middle of May, as robust gas production continues to replenish inventories in
spite of early season above-normal temperatures that have driven demand.

  The U.S. Energy Department is set to release weekly inventory data at 10:30 a.m. ET. Analysts surveyed by The Wall
Street Journal anticipate an increase of 99 billion cubic feet in the week ended May 22, slightly above the 95 bcf
average for this time of year. Still, if the projection proves accurate, total inventories would reach 2.1 trillion
cubic feet, just 1.6% below average for this time of year, as the U.S. continues to replenish stockpiles that shrank
during the winter.

  "If cooling-related demand does not arrive in a strong way, the current robust supply situation will then result in a
drag on prices going forward," analyst Dominick Chirichella of consultancy Energy Market Institute said in a note.

  Forecaster Commodity Weather Group predicted "another slight drop-off in forecast demand over the next two weeks," as
a Northeastern heat wave eased in the coming days and the outlook for continued above-normal temperatures in the region
into mid-June appeared less likely.

  In the cash market for next-day delivery of physical gas, prices at key regional U.S. hubs were below the prior-day
range. The benchmark Henry Hub last traded at $2.7750 a million Btus, compared with Wednesday's range of $2.80-$2.86.
The Transco Z6 hub in New York traded in a bid-offer range of $2.00-$2.65, compared $2.80-$2.915 the day before.


  Write to Christian Berthelsen at christian.berthelsen@wsj.com


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  (END) Dow Jones Newswires

  May 28, 2015 09:12 ET (13:12 GMT)

  Copyright (c) 2015 Dow Jones & Company, Inc.

052815 13:12 -- GMT
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